Mining companies and mining royalties for regions across the country will benefit from the decline in oil prices, as this will result in lower business costs and the possibility to obtain higher returns, reported the Ministry of Energy and Mines (MEM).
“The oil price has sharply fallen, which means mining companies are going to access to cheaper inputs and this, in turn, will result in greater profitability –that is, more taxes and royalties. Not only mining companies will benefit from this, but the whole country itself,” said Deputy Minister of Mines, Guillermo Shinno.
The government official explained the reduction of crude oil price will lead to a a 30% decrease in energy costs for mining companies.
However, he added it is not accurate to say the crude price fall is going to offset the decline in commodities’ prices abroad.
“I do not know if it is considered to be compensation, but this is going to help mining companies and royalties a lot,” he told Andina news agency.
The considerable decline in the price of oil will have a positive impact in the mining sector, which will allow enterprises obtain higher returns and therefore pay more taxes and royalties.
(END) RGP/JJN/RMB/MVB
Published: 1/23/2015